CZ of Binance was fined $50 million and sentenced to four months in prison in California. Binance was fined $4.3 billion.
TakeAway Points:
- Changpeng “CZ” Zhao, Binance founder, is serving a 4-month prison term in California for breaking the Bank Secrecy Act.
- Zhao is the richest individual to have served time in a U.S. prison, having amassed a net worth of $36.5 billion.
- Along with paying $4.3 billion in fines to resolve related allegations, Binance also named an impartial compliance monitor.
The Ex-CEO of Binance Has Begun Prison Sentence
Changpeng Zhao, Binance founder, has started serving his four-month term at a federal low-security facility in Lompoc, California. Zhao, often known as “CZ,” was sentenced in April following his guilty plea to accusations of neglecting to establish a sufficient anti-money laundering (AML) programme at Binance, the biggest cryptocurrency exchange globally. With five months of probation requested by the defence, this sentence is far less than the three years federal prosecutors had requested. Guidelines for sentencing had stipulated a 12- to 18-month prison sentence.
As a non-US citizen, Zhao was originally supposed to be housed at the Seatac federal prison centre in Seattle. He is currently known as detainee 88087-510. Still, he was permitted to report to the Lompoc minimum-security jail, where prisoners labour on horse farms and spend most of their days outdoors.
“He will be perfectly fine at Lompoc low,” said prison consultant Sam Mangel, who has two clients currently at the prison. “There are a lot of experiences that other inmates will be thirsty to hear about, especially in crypto. Now you have this guru coming in and being able to teach or educate them.”
Charges and Agreement
Zhao and the US government came to an agreement in November to end a multi-year probe into Binance.
Zhao consented to pay a $50 million fee after the United States ordered Binance to pay $4.3 billion in fines and forfeiture. Because Binance lacked an AML programme, criminal actors—such as hackers, cryptocurrency mixers, and terrorist organisations like ISIS and al-Qaeda—were able to trade Bitcoin on the exchange.
Zhao conveyed remorse for the transgressions carried out while he was in charge.
“I’m sorry,” Zhao told U.S. District Judge Richard Jones before receiving his sentence, according to Reuters. “I believe the first step of taking responsibility is to fully recognize the mistakes. Here, I failed to implement an adequate anti-money laundering program. I realize now the seriousness of that mistake.”
Effects on the Crypto Industry and Binance
The cryptocurrency market as a whole, as well as Binance, will be greatly impacted by CZ’s conviction. In an effort to better adhere to rules, Binance has announced a number of internal changes, such as the hiring of new executives with financial regulation experience. Given the increasing constraints that regulatory bodies all around the world are putting on cryptocurrency exchange platforms, this case may represent a turning point for the industry. The conviction of a well-known individual like CZ might promote increased compliance and collaboration between industry businesses.
CZ stayed optimistic in spite of his conviction. He expressed regret for the infractions that occurred while he was in charge, but he also reaffirmed his dedication to Binance’s and the cryptocurrency industry’s future in a statement issued through his attorneys. He underlined the significance of growing from errors and attempting to enhance company procedures.
